RIYADH: Saudi Arabia will implement water and sewerage projects worth SR10 billion ($2.7 billion) in the Kingdom's two largest cities over the next two years as part of a larger program to upgrade the country's infrastructure, a government official said. The work covers the expansion of wastewater treatment capacity, sewerage networks and strategic reservoirs in Riyadh and Jeddah, said Loay Al-Musallam, chief executive officer of the National Water Co. (NWC), Dow Jones reported Friday. He said projects worth SR18 billion had been launched in the two cities in the past two years, and added that total investment needed in the Kingdom's water sector was projected to be around $30.5 billion between 2010 and 2016. The figure includes desalination and rural water networks, which are not under NWC's mandate. Saudi Arabia is ramping up investments in water, wastewater and sewerage projects amid rising demand and greater capacity requirements on the back of industrial expansion and a rapidly growing population. "These are a portfolio of projects related to wastewater treatment and the expansion of wastewater treatment capacity," Al-Musallam said. "They include building wastewater infrastructure, big tunnels, mainlines, and some other projects that are related to strategic reservoirs so we should have sufficient water in emergency cases," he added. NWC is eventually targeted for privatization, but Al-Musallam said it would not be likely to issue shares in an initial public offering for two to four years. "Financially, the company now is doing good," he said. "By that time (two to four years) the company can go for an IPO and basically we're talking about a small percentage of the company - 30-35 percent of assets." However, he said making the company financially independent depended partly on an increase in water tariffs, which now stand at just SR0.15 a cubic meter for private customers. Around 80 percent of the company's revenue comes from a small number of commercial customers, he said. "We have to do this gradually because water services have been perceived for the past 40 years as a free service," Al-Musallam said. "By the time we change the tariff I think we will basically be more profitable and we will cover all of our operational and capital investment costs."
